Kogan share price tumbles 9% on first ASX loss

The company has revealed its FY22 results and says it is shifting focus to cost-cutting.

| More on:
A male executive worker wearing glasses and a blue collared shirt looks at his laptop screen with a concerned look on his face and his hand to his forehead as he watches his screen.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Kogan share price is falling after the retailer revealed its FY22 results this morning, but there are further signs of a turnaround
  • While revenue and profit in FY22 both fell, Kogan's adjusted EBITDA showed improvement in 4Q FY22
  • The momentum carried through to July with Kogan pointing out several growth drivers for the business in FY23

The Kogan.com Ltd (ASX: KGN) share price is under pressure as the retailer's focus shifts to cost-cutting after it unveiled a drop in full-year profit and revenue.

Shares in the online retailer opened at $3.52 and quickly fell to a low of $3.445 in early trading — a 9.35% drop. Meantime, the S&P/ASX All Ordinaries Index (ASX: XAO) has shed 0.5%.

This is the first loss reported by Kogan since it was listed on the ASX, according to The Australian.

Kogan.com is struggling to overcome the volatile trading environment as we emerge from COVID-19. But there are signs of hope.

Summary of Kogan's FY22 results

  • Revenue declined 8% to $718.5 million, reflecting a compound annual growth rate (CAGR) of 20.1% since FY20
  • Gross profit declined 9.3% to $184.4 million, reflecting a CAGR of 20.7% since FY20
  • Gross sales grew 0.1% to $1.18 billion (includes gross transaction values for Kogan Marketplace, Kogan mobile, and other new verticals)
  • A return to adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) profitability in 4Q FY22 with an adjusted net loss of $2.9 million for the full year
  • Group active customers of 3,972,000 at 30 June 2022, reflecting a CAGR of 20.9% over two years.

Other highlights

The group's Kogan Marketplace business saw gross sales increase 20.3% year over year (yoy) in FY22. This is partly driven by the 49.1% increase in the number of sellers on the platform, with a strong pipeline of local and overseas sellers ready to be onboarded.

Meanwhile, the Kogan First membership business grew by 372,000 subscribers to the end of FY22. This helped push up revenue by 73.4% yoy. The company aims to have one million subscribers.

However, its exclusive and third-party brands sales fell 17.6% and 35%, respectively. This division struggled with excess inventory and associated holding costs, although the situation has improved.

Given the uncertain trading environment, the company decided not to pay a final dividend. The last time Kogan paid a dividend was in May last year.

What Kogan.com said about its FY22 results

Kogan's founder and CEO said:

As the true volatility of the situation settled in — caused by stay at home orders and lockdown ambiguity — eCommerce did not continue to grow as anticipated. This led to us holding excess inventory, and an associated increase in variable costs and marketing costs to sell through the inventory.

As we've discussed at length through regular updates this past year, profitability in FY22 was impacted. When I started Kogan.com 16 years ago, I made a bet that online shopping would define the future of retail. My certainty of that is even stronger today than it's ever been.

Outlook

While Kogan.com didn't give guidance, it painted a positive outlook for FY23. It noted the ongoing expansion of Kogan Marketplace, enhancements to Kogan Verticals, further growth of its recently acquired Mighty Ape business, and growing Kogan First membership as reasons for shareholders to feel upbeat.

The company said it will focus on cost-cutting to help drive improved earnings this financial year. Its adjusted EBITDA in the last quarter of FY22 turned positive.

To that end, its July results will give shareholders further hope of a turnaround. Kogan.com noted that adjusted EBITDA for the month was $1.5 million and its operating costs have been cut 19.3% yoy.

Kogan share price snapshot

The Kogan share price has fallen by more than 70% over the past year while the All Ordinaries has lost 7%.

Kogan is also lagging behind other ASX retailers like JB Hi-Fi Limited (ASX: JBH) and Super Retail Group Ltd (ASX: SUL). These ASX retail shares lost 9% and 16%, respectively, over the past 12 months.

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com ltd and Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Kogan.com ltd and Super Retail Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Web Travel share price rockets 13% on market leading full-year growth

Investors are sending Web Travel shares soaring today. Here’s why.

Read more »

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Up 78% since April, why is the Webjet share price taking off again today?

Webjet shares have soared 78% since 4 April and are lifting off again today. But why?

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Industrials Shares

Guess which ASX 200 stock is crashing 24% on results day

Investors were not impressed with this result. But why?

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »